Fidelity Investments Launches Cryptocurrency Trading Company To Attract Institutional Money

Fidelity Investments announced in a press release Monday it had launched a new company, Fidelity Digital Asset Services LLC, that will offer digital currency services to its customers. The new company will extend trade execution services of cryptocurrencies, to institutional investors — such as hedge funds, family offices, and market intermediaries. The intent behind launching the company is to make digitally-native assets (such as bitcoin) more accessible to investors, according to a press release by Fidelity.

“We expect to continue investing and experimenting, over the long-term, with ways to make this emerging asset class easier for our clients to understand and use," Abigail P. Johnson, chairman and CEO of Fidelity Investments, said in the release.

Tom Jessop, head of Fidelity Digital Assets, said in the press release: “The creation of Fidelity Digital Assets is the first step in a long-term vision to create a full-service enterprise-grade platform for digital assets.”

While analyzing what the market requires — in terms of the investment requirements for institutional investors — the press release said a Fidelity Global Institutional Investor Survey found "70 percent of institutional investors said that new asset classes will likely emerge because of advancing technologies, such as blockchain." Most institutional investors might enter the market because of the interest in digital currencies but there are various other factors that drive them to invest, like the use cases of the underlying technology — blockchain.

"Whether it’s the rising popularity as a store of value or relative non-correlation to the broader market, the potential to power lower-cost global payments, or the emergence of protocols that could power new industries, institutional investors are interested in engaging with this new asset class," the press release read.

Fidelity Digital Assets is offering services to attract institutional investors. Those services include institutional-grade custody of digital assets (storage solution like cold storage, multi-level physical and cyber controls), trade execution (at multiple market venues using various mechanisms), and dedicated client service (to handle everything from onboarding to the entire relationship).

“In our conversations with institutions, they tell us that in order to engage with digital assets in a meaningful way, they need a trusted platform provider to enter this space. These institutions require a sophisticated level of service and security, equal to the experience they’re used to when trading stocks or bonds," Jessop said, explaining Fidelity's new offering.

"With Fidelity Digital Assets, we’re building a scalable infrastructure for digital assets that meet the expectations of what it means to work with Fidelity while leveraging unique capabilities of the blockchain to create a completely new offering,” he concluded.

Fidelity had started exploring blockchain and cryptocurrencies several years ago. Speaking at the 2018 edition of Boston Fintech Week in September, Johnson said it started with building a long list of use cases for anything the company came across in this space, like the then-potentially-raw blockchain technology, or cryptocurrencies.

The investment firm already lets some clients view their cryptocurrency holdings right next to their other accounts in their Fidelity portfolio. This was a project started by Fidelity Labs in August 2017, in partnership with the cryptocurrency exchange Coinbase.